The use of corporate responsibility reports – For managing legitimacy

Abstract

Society acknowledge that companies’ operations have an impact on their surrounding, as a result companies are no longer only held responsible for maximizing shareholders’ value but also for their operations’ environmental and social impacts. According to the legitimacy theory social values and corporate operations have to be aligned in order for a company to fulfill the social contract providing it with a “license to operate”. Previous researchers using legitimacy theory found evidence for that companies use disclosure approaches in their corporate social reporting in order to attract external support for its activities and show that its activities are in line with social values. The purpose of this paper is to acquire knowledge about how corporate responsibility reports are used for managing legitimacy and what legitimate effect chosen disclosure approaches have. The aim of the paper is to examine how a company reacts and responds to public concerns about its operation and what effect a company’s response has on public concerns, which could affect its “license to operate”. By establishing an analysis model, based on previous legitimacy research, a case company’s response to public concerns through their corporate responsibility report is studied. The case company, Vattenfall, is a large Swedish state- owned energy company. Vattenfall’s operations are considered to be environmentally sensitive, as its energy portfolio includes both nuclear and coal plants. As such the company experiences a great deal of external pressure to ensuring their surrounding that its operations deserves a “license to operate”. Furthermore, the company’s communication is exposed to a heterogeneous audience, with conflicting perception towards its operations. A study of how Vattenfall’s operations are covered by Swedish press is conducted in order to get some insights of how news may affect disclosure practice and how disclosure strategies may affect news coverage. A longitudinal study of Vattenfall’s communication process to address public concerns is conducted with the aim to illustrate how a company yearly deal with changes in public perceptions by using corporate social reports as one tool to manage legitimacy and with a second aim to examine what effect such management has on public concerns and possible reasons for lack of positive effects. I would like to emphasis that is paper is only a working paper where one issue brought up in Swedish press, the use of nuclear power is discussed.